While domestic digital payment usage surged during the pandemic, the EIU expects this to slow over the next five years, largely owing to strong base effects. However, customers are increasingly demanding a similar revolution in cross-border payments, which are still mostly facilitated by the "old-fashioned" and "cumbersome" correspondent banking network. At the centre of this is Swift, which the paper notes has "encountered criticism for its relative inflexibility and lack of transparency" and seen a decline in the number of correspondent banking relationships over the last decade. More recently, Russian has been kicked off the Swift network, a move which could see the country and others such as China and India double down on their nascent Swift alternatives. Nevertheless, the paper says "setting up and scaling a full-fledged alternative bank-messaging system would be expensive and time consuming. It would also have limited real-world impact, given the prevalence of dollar-denominated cross-border flows. Swift will remain the dominant network, as long as countries and lenders come together to improve the Belgian network." Separately, cross-border payments will be disrupted by government-backed efforts to link systems. In Asia, moves are already underway to do this, allowing travellers across the region to purchase goods and services by scanning QR codes. As well as challenging Swift, disrupting cross-border payments will mean adopting emerging technologies, including blockchain, APIs and tokenisation, says the EIU.

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